Pentagon cuts costs, challenges contractors

Stan Soloway, president, Professional Services Council

The Pentagon has unwrapped details of a sweeping cost-cutting program that puts both contractors and its own acquisition workforce under pressure. More fixed prices contracts and cancellation of programs that get out of control are just some of the 23 new strategies.

Professional Services Council president, Stan Soloway, told Federal News Radio industry's reaction has been somewhat "muted" so far because "the initiative makes a lot of sense."

Overall, industry is "very supportive," said Soloway, and while there are many details to be worked out, he said he's encouraged by the collaborative spirit he's finding.

What I think was important and interesting just in general tone about the memo, the press conference, the meeting we had with them yesterday was a recognition that this is a shared responsibility and a shared problem. A lot of the rhetoric the last couple of years has been around, "Oh the private sector's done this, the private sector hasn't done that," and I think what Dr. Carter (Under Secretary of Defense for Acquisition, Technology, and Logistics) and the Secretary clearly recognized is that there's a lot of stuff we're both doing that may be driving costs up higher than they need to be. It's not about nefarious behavior. It's just about the way the process of the system is structured.

Soloway particularly said it was "good to hear" about incentives and building different kinds of contract relationships. Most of all, it's been nice to be asked to contribute to the process, said Soloway.

Based on the meeting we had yesterday and the announcement and the press conference on Tuesday, and of course there's been engagement on this for a couple of months, since they started this process back in June there's been opportunities for all stakeholders, not just industry, to sort of submit ideas, have some conversations. There haven't been a lot of direct communications because they were in the process of developing this guidance. But we've had opportunities to put some ideas in, and those opportunities continue because there are so many details now to work out.

Based on the tone, the tenor and the committment Dr. Carter and some of his senior aides made yesterday, I think that the opportunity for a really robust dialogue is there and that's going to be the key. One of the things that has concerned me...leaving the specific issues aside, there has been a lot of pressure in the system over the last couple of years that has resulted in diminished communications, particularly with industry but with stakeholders generally. I think it needs to be clear within the department and across the system that the best way, and the most effective way to achieve this is in a collaborative manner. That you don't want to just get into a prescriptive, sort of dictatorial process and say "Well, we're just going to cut costs on this," without looking at all the unintended consequences or other alternatives. Dr. Carter committed to a very collaborative process. They have been seeking input over the last couple of months. And so if we can have that kind of dialogue as we go forward, I think there are some opportunities for improvement here.

To hear the entire interview with Stan Soloway, president of the Professional Services Council, click on the audio player at the top of the page.

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